With a new calendar year, your business is in for a payroll tax hike with Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) increases that start January 1, 2022. Here is a list of new rates you’ll pay at the federal level.
CPP
Premiums for the Canada Pension Plan increase in January from 5.45% of your employee's earnings to 5.7%
• The yearly maximum pensionable earnings (YMPE) is set at $64,900, up from last year’s limit of $61,600.
• Employer and employee contributions will be maxed at $3,499.80, up from the $3,166 from last year.
• Self-employed contributions will be maxed at $6,999.60 up from $6,332.
Why is this year different?
The yearly maximum pensionable earnings (YMPE) were set to increase by $2,100 over last year's limit of $61,600, but instead have been increased by $3,300 - a 5.3% increase. This is the largest percentage increase since 1992. It is also the second year in a row of unexpected increases in the YMPE as a result of the effect of the pandemic on the labour market.
A smaller-than-usual number of lower income workers returned to work in the second half of 2020 and the first half of 2021. The formula compares increases in the average weekly earnings made throughout the year up until June 30 to the same amount during the previous 12-month period. Since fewer jobs were held by lower income workers, fewer were included in the calculation.
QPP
For the province of Quebec, the premiums for the Quebec Pension Plan increased from 5.90% of your employee’s earnings to 6.15%.
• The yearly maximum pensionable earnings (YPME) is set at $64,900.
• The employer and employee contributions will be maxed at $3,776.10, up from $3,427.
What is CFIB doing?
We’ve fought these increases, which are part of a seven-year plan approved by the provinces and the federal government five years ago to raise CPP premiums to provide for greater CPP benefits decades from now.
While payroll tax increases negatively affect your bottom line in any year, doing so during a pandemic, when one in three small businesses is losing money everyday, is making things even worse. We continue to push for better retirement savings policies and in our 2021 pre-budget submission, we asked the government to put a moratorium on any new cost to small business and to introduce hiring incentives to offset the increase to CPP and QPP.
Employment Insurance (EI)
The employee and employer rates remain unchanged for 2022, while the maximum insurable earnings increased from $56,300 to $60,300.
The premium rate in 2022 for employees covered under the Quebec Parental Insurance Plan (QPIP) has increased this year. The Quebec employee contribution is set at $1.20 per $100 of insurable earnings up from $1.18, while the Quebec employer rate is set at $1.68 per $100 of insurable earnings, up from $1.65.
Overall, you will still be paying 1.4 times what your employees pay – so CFIB is keeping up the fight to bring more fairness to the EI system for your business!
EI RATES (per $100 insurable earnings)
| 2021 | 2022 | |||
| Quebec | Canada | Quebec | Canada | |
| Employee rate | $1.18 | $1.58 | $1.20 | $1.58 |
| Employer rate | $1.65 | $2.21 | $1.68 | $2.21 |
Our Business Advisors are always here for you if you have any further questions!